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Taiwan Dollar Completes Worst Month Since May on Stock Outflows

Nov. 29 (Bloomberg) -- Taiwan’s dollar completed its worst month since May as overseas funds cut holdings of the island’s stocks amid speculation the Federal Reserve is closer to paring stimulus that’s buoyed emerging-market assets.

Global funds sold $793 million more Taiwanese shares than they bought in November, exchange data show, after two months of net inflows. Minutes of the Fed’s Oct. 29-30 meeting released last week showed policy makers said the central bank’s monthly asset purchases may be reduced in the “coming months” as the world’s largest economy improves. Claims for unemployment benefits fell in the last three weeks in the U.S., while jobs growth in October topped forecasts.

“Overall fund flows are moving toward Europe and the U.S. and there’s been no obvious shift back into Asia, so the entire trading range for the Taiwan dollar shifted” downward, said Andrew Tsai, a Taipei-based economist at KGI Securities. “At least the Taiwan dollar and the Korean won have held steadier than other emerging-market currencies.”

Taiwan’s dollar weakened 0.8 percent this month to NT$29.679 against the greenback, prices from Taipei Forex Inc. show. The won rose 0.2 percent in November while Indonesia’s rupiah slid 5.8 percent, Malaysia’s ringgit lost 2.1 percent and the Thai baht fell 3.1 percent.

Taiwan’s currency slipped 0.3 percent in the last five minutes of trading today to close unchanged amid suspected central bank intervention. The monetary authority has sold the local dollar in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.

Bonds Fall

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, increased nine basis points this month to 3.23 percent. The measure fell six basis points today. One-month non-deliverable forwards on Taiwan’s currency fell 0.7 percent in November to NT$29.560 per dollar and rose 0.1 percent today, data compiled by Bloomberg show.

The yield on the 1.25 percent government bonds due October 2018 climbed one basis point from Oct. 31 and two basis points today to 1.0983 percent, according to Gretai Securities Market.

Taiwan sold NT$35 billion ($1.2 billion) of 10-year notes at a yield of 1.673 percent at an auction today. The yield rose four basis points in secondary market trading to 1.684 percent, the biggest jump for 10-year government bonds since Nov. 11.

The overnight interbank lending rate was steady this month and today at 0.386 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

The government will release revised third-quarter gross domestic product data and this year’s growth forecast today.

To contact the reporter on this story: Justina Lee in Hong Kong at jlee1489@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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